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About The Solar Panel Tier Scale: What Does It Mean

Advantage Power® with Solafied® know that installing solar should be a long lasting investment and therefore, believes that it is very important to stick with Tier 1 Solar Panels. Hopefully, after reading the following information and doing some research, you will agree with us that Tier 1 Solar Panels are really the way to go.

A Quick Overview Chart


Advantage Power Solar Panel Quality Tier Pyramid
(Source: Pike Research)

Overview

While the Tier system is usually incorrectly used to describe the quality of Solar Panels, it is in some way relevant. The Tier 1 ranking scale is actually used to rank solar panel manufacturers in terms of their bank-ability or financial stability. It is used internationally and orchestrated by Bloomberg New Energy Finance Corporation.

So one may quite rightly make an assumption that a Tier 1 ranking has more to do with financial stability rather than product quality. However, if you think a little deeper, to obtain a Tier 1 status, a company must pass a number of stiff prerequisites (listed below) and have successfully completed a required amount of trading. From this we know that a manufacturer has trading for a substantial amount of time, and therefore, can be more confident that they make a quality product and have a greater likely-hood of remaining in business in regards to warranties.

A significant number of Solar Panel Retailers use the Tier 1 description deceptively for describing their own opinion of quality. It is therefore important to note that only a very small percentage of the world’s solar panel manufacturers achieve Tier 1 ranking so you should be very wary if a solar sales representative makes the Tier 1 claim.

Bloomberg define a Tier 1 solar manufacturer as “those which have provided products to five different projects which have been financed non-recourse by five different (non-development) banks in the past two years” That being said, a bank would not back a project worth say $200 million dollars if the product used was likely to fail in the short-term thus, inadvertently, a Tier 1 solar panel is a high quality panel or should we say a solar panel that is designed to produce power for as long as the expected lifespan which is around 25 years.

The other reason why one can make the assumption that a Tier 1 solar panel is a quality panel is based on the criteria set by Bloomberg in that only solar panel manufacturers that own their own manufacturing facility can be included for review. If a solar company outsources the manufacturing of its panels as many manufacturers do, then it will not be included on the Tier 1 list. If a company owns its own manufacturing facility then you know that there will be strict quality control guidelines in place which ultimately will result in product that is more reliable!

Companies having invested in their own manufacturing are also investing into research and development of their product. Simply put – they want their solar panel to be better than a competitor’s solar panel. They seek to have a competitive advantage over similar manufacturers so they can sell more of their product. The reality is, that all of the Tier 1 manufacturers are doing their own R&D which can only mean that the consumer who buys and installs a Tier 1 panel is benefiting from the very latest technology.

So, while it is not technically correct to use the Tier Scale as a scale of quality, we can see how it is important to have a quality product to be a Tier 1 Manufacturer. It is also very important that when a sales representative states Tier 1 status, that they are in fact referring to the Bloomberg New Energy Finance Corporation listing as only a small number of manufacturers make the grade.

While the Tier system is usually incorrectly used to describe the quality of Solar Panels, it is in some way relevant. The Tier 1 ranking scale is actually used to rank solar panel manufacturers in terms of their bank-ability or financial stability. It is used internationally and orchestrated by Bloomberg New Energy Finance Corporation.

So one may quite rightly make an assumption that a Tier 1 ranking has more to do with financial stability rather than product quality. However, if you think a little deeper, to obtain a Tier 1 status, a company must pass a number of stiff prerequisites (listed below) and have successfully completed a required amount of trading. From this we know that a manufacturer has trading for a substantial amount of time, and therefore, can be more confident that they make a quality product and have a greater likely-hood of remaining in business in regards to warranties.

A significant number of Solar Panel Retailers use the Tier 1 description deceptively for describing their own opinion of quality. It is therefore important to note that only a very small percentage of the world’s solar panel manufacturers achieve Tier 1 ranking so you should be very wary if a solar sales representative makes the Tier 1 claim.

Bloomberg define a Tier 1 solar manufacturer as “those which have provided products to five different projects which have been financed non-recourse by five different (non-development) banks in the past two years” That being said, a bank would not back a project worth say $200 million dollars if the product used was likely to fail in the short-term thus, inadvertently, a Tier 1 solar panel is a high quality panel or should we say a solar panel that is designed to produce power for as long as the expected lifespan which is around 25 years.

The other reason why one can make the assumption that a Tier 1 solar panel is a quality panel is based on the criteria set by Bloomberg in that only solar panel manufacturers that own their own manufacturing facility can be included for review. If a solar company outsources the manufacturing of its panels as many manufacturers do, then it will not be included on the Tier 1 list. If a company owns its own manufacturing facility then you know that there will be strict quality control guidelines in place which ultimately will result in product that is more reliable!

Companies having invested in their own manufacturing are also investing into research and development of their product. Simply put – they want their solar panel to be better than a competitor’s solar panel. They seek to have a competitive advantage over similar manufacturers so they can sell more of their product. The reality is, that all of the Tier 1 manufacturers are doing their own R&D which can only mean that the consumer who buys and installs a Tier 1 panel is benefiting from the very latest technology.

What makes a Tier 1 solar panel?

The pyramid at the top of the page, by Pike Research, lays out its version how it differentiates the 3 tier rankings of solar panels manufacturers from one another. Other organisations  and research firms may have different methods for determining the tier ranking of a solar panel manufacturer, but they are all roughly in the same ballpark as Pike’s. According to Pike at the time of the report, Tier 1 manufacturers represent only a small slice (2%) of the total number of manufacturers on the market and a number of factors set them clearly apart from their competitors.

-First of all, they are vertically integrated, meaning that they don’t simply assemble solar panels using other companies’ products, they manufacture their panels from the ground up. This means that they control the production process for everything from the silicon cells to the modules frames and ultimately panel assembly.

-Tier 1 installers invest heavily in research & development (R&D)and continually innovate in order to improve their products and processes.

-Tier 1 installers also use highly automated manufacturing techniques that are conducive to a standard level of quality, while (in many cases) saving money on manufacturing costs at the same time.

-Finally, at least 5 years’ history producing solar panels is the other criterion for being considered Tier 1 for Pike Research. Having been around for at least this amount of time in what is a relatively young industry is testament to a company’s commitment to its own longevity as well as to its customers, and is indicative of the likelihood that that company will still be around in 20+ years’ time to service its warranties.

Tier 2 solar panel manufacturers

Manufacturers ranked as Tier 2 are the ‘middle ground’ between Tier 1 and Tier 3, comprising about 8% of the market. Although they have been producing panels for longer than Tier 3 manufacturers (2-5 years), they still invest relatively little money in R&D compared to Tier 3 manufacturers. Robotic automation does not always play a major role in their panel production lines. Many Tier 2 manufacturers doubtless have Tier 1 aspirations, but may not have the wherewithal or experience to yet make the cut.

Tier 3 solar panel manufacturers

Tier 3 manufacturers comprise the bulk of the market (90%), according to Pike Research, but have the least experience. Their operations are limited to assembling panels using components manufactured by other companies (i.e. no R&D operations of their own), and their production processes are highly reliant on manual labour. With solar panel manufacturers across the globe facing hard times due to a massive glut of stock, it is not unreasonable to think that many of these companies will not be around in the next few years as the industry consolidates.

In Summary

While it is not technically correct to use the Tier Scale as a scale of quality, we can see how it is important to have a quality product to be a Tier 1 Manufacturer. It is also very important that when a sales representative states Tier 1 status for their product, that they are in fact referring to the Bloomberg New Energy Finance Corporation listing and can prove it as only a small number of manufacturers make the grade.

Advantage Power® with Solafied® made a consious decision to go with high standing manufacturers for our energy product range, hence the selection of Tier 1 solar panels, even though it means smaller margins. As we plan to be in this field for a long time to come, quality and verticle support is very important to us. We can only hope that you to see and agree with the logic behind this sdecision.